Barclays missed third-quarter profit expectations after its investment bank fell short of forecasts, despite stronger performance on its trading desks.
The bank reported a £2.3bn pre-tax profit for the three months to the end of September, below an internal consensus of £2.4bn. However, profit was 12 per cent higher than in the same period a year earlier.
Investment banking income below forecast
Barclays’ investment bank recorded total income of £3.1bn, compared with a £3.3bn forecast. Income in the division grew by one per cent from the same period in 2025.
The equities division rose 47 per cent to £1bn. City AM attributed the increase to market volatility triggered by the US-Iran war.
That performance was partly offset by fixed income, which fell 19 per cent year-on-year to just over £1bn. The decline followed lower client activity in rates and credit, alongside macroeconomic headwinds.
Chief executive CS Venkatakrishnan has made an overhaul of the investment bank a key part of his multi-year strategy. He is targeting a 12 per cent return on tangible equity for the division by the end of the year, in line with the broader group target.
The investment bank recorded a 13.5 per cent return on tangible equity year-to-date, up 60 basis points from the same period last year. Return on tangible equity measures net income against the average value of a company’s common equity.
Share buyback launched
Barclays recorded a group return on tangible equity of 13.8 per cent year-to-date, up from 12.3 per cent a year earlier. The bank launched a £500m share buyback following the results.
Venkatakrishnan targeted a group return on tangible equity of more than 14 per cent by 2028 earlier in the year.
Barclays’ UK retail banking division increased income by five per cent in the latest quarter to £1.8bn. The division was supported by structural hedge earnings and strong mortgage balance growth.
Banking tax in focus before Budget
The update came less than a week before Chancellor John Healey’s maiden Budget, where banks were expected to face a tax increase.
Healey faced lobbying from the left of the Labour Party and trade unions to impose higher taxes on the banking sector following the industry’s profits that year.
An increase in the banking surcharge on top of corporation tax was described as the simplest available lever. The surcharge was three per cent after being reduced from eight per cent under Jeremy Hunt in 2023.
A reversal of the 2023 reduction was understood to be under discussion and would raise around £2bn a year.
Source: City AM
